Shanghai, China December 12, 1937

In 1937 the Chinese city of Shanghai, a city of 3 million people, domi­nated the coun­try eco­nom­i­cally. Located on one of the many trib­u­taries of the Yangtze River, Shang­hai was a “treaty port” (i.e., open to foreign traders) on the East China Sea. Then as now the Yangtze River basin com­prises one-fifth of the land area of China, con­tains nearly one-third of the national pop­u­la­tion, and is China’s agri­cul­tural mother­lode. Half the country’s inter­national trade passed through Shanghai port.

Because of Shanghai’s importance as a center of com­merce, the United States, along with other major Euro­pean powers, con­cluded treaties with local and national autho­ri­ties and placed gun­boats on the Yangtze River as early as the mid-nineteenth century. At the turn of the 20th cen­tury, expanded U.S. interests in the area prompted the U.S. to create an Asiatic Fleet to pro­tect its trading interests in the Asia-Pacific region and establish a Yangtze River Patrol that, by the out­break of the First World War, pro­tected Amer­i­can eco­no­mic and com­mer­cial interests (among them Standard Oil) from feuding Chinese warlords, bandit gangs, and pirates.

In the 1920s the U.S. commissioned and placed six new Chinese-built, shallow-draft gun­boats on the Yangtze capa­ble of traveling 1,300 miles up­stream. One was the 474‑ton Panay, a 191‑ft ship armed with eight .30-cali­ber machine guns and two 3‑inch deck guns fore and aft. The Panay had a crew of five officers and 54 enlisted men.

Following years of diplomatic and military incidents over Japan’s efforts to secure access to Chi­nese raw mate­rial reserves, food, and labor beginning with that country’s take­over of Man­chu­ria in North­east China in 1931, Japa­nese forces attacked Shang­hai on August 13, 1937. After securing con­trol of Shang­hai, the Japa­nese moved up the Yangtze to Nan­king (Nan­jing), the capital of Nation­alist Chi­nese leader Chiang Kai-shek; they reached the city’s out­skirts on Decem­ber 1. Thirteen days later the Japa­nese had driven the Nation­alist army from Nan­king. The infamous Nan­king Mas­sacre of Chi­nese civil­ians and dis­armed com­bat­ants, esti­mated to be between 40,000 and 300,000, started that day and lasted six weeks.

Meanwhile, in early December 1937 the USS Panay left war-torn Shang­hai for Nan­king to remove the remaining Amer­i­cans from the Chi­nese capital. Lest the U.S. gun­boat be mis­taken for an enemy vessel (the U.S. was neutral in the con­flict), the Panay’s captain draped Amer­i­can flags across the boat’s upper deck; a large 6‑ by 11‑ft flag flew from the boat’s mast. Docked at Nan­king on Decem­ber 9, the Panay took on board eight Amer­i­cans, four of whom were embassy staffers, and nine others, including two jour­nalists and two news­reel camera­men. On Decem­ber 11 the Japa­nese began shelling near the loca­tion of the Panay, three Standard Oil barges flying Amer­i­can flags, and two motor sampans that were there to help Standard Oil employees and agents escape the con­flict. The Panay, barges, and sampans quickly moved seven miles upriver.

On this date, December 12, 1937, shrugging off a shake­down attempt by a Japa­nese naval officer wanting infor­ma­tion about the dis­po­si­tion of Chi­nese armed forces along the river, the Panay and con­voy dropped anchor 27 miles north of Nan­king. The Panay’s cap­tain con­tacted Amer­i­can author­i­ties to alert Japa­nese author­i­ties of the ships’ new loca­tion. At roughly 1:40 p.m. three Japa­nese carrier attack bombers, joined soon by a dozen-and-a-half dive bombers and fighter planes, began dropping bombs and strafing the Panay and its con­voy. The unpro­voked and wanton attack put the gun­boat out of action, caused it to settle on the river bottom, and set two of the three oil barges ablaze. Killed on the Panay were 2 crew­men and 1 pas­senger. Casual­ties numbered 43, including 11 offi­cers and men seriously wounded. The captain of one of the oil barges was killed as was a number of Chi­nese passengers before the Japanese warplanes left the scene.

USS Panay and the U.S. Navy’s Yangtze River Patrol

USS Panay: Map of Yangtze River Basin, China

Above: Map of China’s Yangtze River. From Shanghai the Yangtze’s watery hinter­land stretches nearly 4,000 miles to the south­west before swinging north-north­west. In the 1840s the United States, other Euro­pean powers, and, after 1895, Japan carved out extra­terr­itorial con­ces­sions out­side the walled city of Shang­hai, which was still ruled by the Chi­nese, and floated patrol ships on the great water­way. Citi­zens of many coun­tries and all con­ti­nents came to Shang­hai to live and work during the ensuing decades. By 1932 Shang­hai had become the world’s fifth largest city, home to 70,000 foreigners, and had become the pri­mary finan­cial hub of the Asia-Pacific region. Only Man­hatt­an had more sky­scrapers than Shang­hai. But in that same year the Japa­nese, supported by ships, war­planes, and 100,000 troops, used an anti-Japa­nese inci­dent to expand their influ­ence in Shang­hai. In May a cease­fire agree­ment made the city a demil­i­ta­rized zone and for­bade the Chi­nese to garri­son troops, excepting a small police force, in the city and sur­rounding areas while allowing the pre­sence of a few Japa­nese units in the city. In August 1937 the Japa­nese used Shang­hai as their launch­pad to over­throw the Nation­alist Chi­nese govern­ment in a pro­tracted tug-of-war that only ended in Sep­tem­ber 1945 with Japan’s unconditional surrender to the Allies.

USS Panay on patrol on China’s Yangze RiverUSS Panay partially submerged in Yangtze River after December 12, 1937 attack

Left: When the battle for Shanghai erupted in August 1937, Chiang Kai-shek’s Nation­alists held out for three months before the Japa­nese forced them to abandon the city. The Nationalists even­tu­ally relocated to Chong­qing (Chung­king), 1,300 miles upriver. As the Japa­nese approached Nan­king, the then capital of China, the U.S. Embassy evacu­ated the bulk of its staff aboard the USS Luzon, a slightly larger gun­boat than the aging Panay. Lt. Cmdr. James J. Hughes, skipper of the smaller of the two gun­boats, was ordered to retrieve the skele­ton staff, which included the U.S. ambas­sa­dor to China, remaining in Nanking, plus any Amer­i­can and foreign nationals who wanted to flee the city. Hughes was severely wounded in the thigh when the first Japa­nese bomb hit the Panay’s pilot­house on the sunny and clear after­noon of Sunday, Decem­ber 12, 1937. Shortly after­wards the gun­boat’s exec­u­tive offi­cer was rendered speech­less by a shrap­nel wound in his throat and com­mun­i­cated his orders to the crew in pencil on the bulk­head and navi­ga­tion chart. To crew and pas­sen­gers on board, it was obvious that the two Japa­nese air strikes (one bomb run and a 20‑minute strafing attack) were delib­er­ate: the enemy pilots were flying low enough to clearly see the Amer­i­can flags on the stern’s mast and lashed across the boat’s upper deck and their faces were clearly recog­nizable by those on the ship’s deck. Uni­ver­sal News­reel camera­man Norman Alley and Fox Movie­tone Eric Mayell grabbed their cameras and filmed the air strikes. (See YouTube video below.)

Right: Once the survivors of the attack reached a small Chinese fishing village they raised the alarm. In the mean­time, two boat­loads of Japa­nese soldiers had boarded and then quickly left the sinking Panay. U.S. and British gun­boats rushed to the scene, including ships and search planes from Japa­nese autho­ri­ties who appeared shocked and confused by the inci­dent. The release of the two camera­men’s film on Decem­ber 19 gave the lie to the fiction that the Japa­nese had been targeting Chi­nese fleeing Nanking in troop trans­ports. U.S. Navy inter­cepts of Japa­nese radio mes­sages to the incoming war­planes on Decem­ber 12 also showed that the attack on the Panay was inten­tional. Indeed, earlier that same day Japa­nese gun crews were reported to have opened fire on the Royal Navy gun­boat HMS Lady­bird, killing a sailor and wounding several others. A British mer­chant ship and four other gun­boats were also fired on. Con­tem­porary ana­lysts and Amer­i­can news­papers, as well as later histo­rians, put forth one argu­ment that the Panay inci­dent was most likely launched by radi­cal ele­ments with­in the Japa­nese mili­tary that were trying to pro­voke war with the U.S. Another argu­ment was that the same radi­cal ele­ments saw the inci­dent as a way of forcing the U.S. to with­draw its presence from China. Presi­dent Frank­lin D. Roose­velt accepted Japan’s apology for the unhappy inci­dent and the $2,214,007.36 indem­nity paid to the U.S. Trea­sury in April 1938. Thus the matter was closed. For the moment at any rate. Then, almost 4 years later, in Novem­ber 1941, naval autho­ri­ties in Washing­ton ordered all U.S. Navy vessels to leave China and pro­ceed to the peace­time safety of the Philip­pines to rein­force the Amer­i­can presence there. The ships of the China Station were in their new South­east Asian anchor­age two days before Japa­nese war­planes dropped their deadly payloads on Pearl Harbor in Hawaii.

Rare Newsreel Footage by Universal Cameraman Norman Alley of Japanese Bombing of Nanking and USS Panay, December 1937

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